While it is a light week of economic events, the FX space today was dominated by the prospects of a flurry of corporate results this week in earnings season. Nearly a third of the Dow 30 companies will kick-start earnings season this week.
Investors had hopes for a profitable first quarter, however, the performance today was not so good. The Dow is currently at 20,398.95 down 0.36% so far on the back of the Dow component, IBM Corp. (IBM), dropping 5.2% after the tech giant posted weaker-than-expected quarterly sales late Tuesday. This drove supply into the dollar and benefitted the yen.
DXY was up 0.31% at time of writing, at 99.81 vs the range of between 99.502 - 99.893, while US 10-year's were up 1.80% at 2.2072% vs a range of between 2.1735 - 2.2231%. USD/JPY dropped from 109.18 to 108.35 where demand took the price back to 108.81 at the time of writing. In the Euro area, inflation data came in as expected. Annual inflation was 1.5% in March while the trade balance showed a larger-than-expected surplus of €19.2B (adjusted). EUR/USD has been consolidating between 1.0699 and 1.0737.
The GBP/USD gave back some ground after markets bought the snap election announcements yesterday and sold the approval in parliament today. GBP/USD fell back from 1.2862 the high to 1.2771 the low so far.
The Canadian dollar was again offered heavily and USD/CAD went from 1.3373 the low to 1.3491 the high as crude oil prices dropped sharply following the EIA report. U.S. crude stocks fell 1 million barrels in the week ending April 14, according to the U.S. Energy Information Administration. As for the Antipodeans, AUD was offered from 0.7564 to 0.7490, still wearing the pain from the dovish RBA minutes in the weak and base metals in the red still. The kiwi moved in a similar fashion from 0.7056 to 0.6994 the low await NZ CPI data.
The day ahead:
The key event for the day ahead lies wth the NZ CPI data.
"Attention turns to Q1 CPI where TD/market is looking for +0.8%/q while quite a few look for +0.9%," explained analysts at TD Securities. "Excluding food and fuel, however, it is likely to be closer to +0.2%. It isn’t this CPI that matters, but whether inflation expectations jump afterwards."
Key events from US session
- Le Monde/Cevipof Poll: R1 Macron 23%, Le Pen 22.5% - Livesquawk
- U.S. House Speaker Ryan: U.S. is ready to forge a new bilateral trade deal with UK as soon as possible
- WTI nears $50 amid increasing U.S. crude oil production
- Fed's Beige Book: Employment increased at a modest-to-moderate pace; labor markets remained tight
- USD/JPY intermarket: investors exit the major as Dow tanks
- UK: May wins vote for early general election
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